GBPUSD – Monthly Forecast Aug 2013


As shown on the monthly chart below, buyers failed to bottom 3 times in the past, once at 1.5271 (Oct 2011 low), the second one at 1.5233(Jan 2012 low), the last one at 1.5237 (Jun 2012 low) , because of the lack of bullish momentum , the pair extended its weakness beneath those level to get the needed momentum to help the pair rising once again, in other words, the GBPUSD is in extended bullish divergence on the monthly chart, this scenario is bearish in short-term view (1-2) years and bullish in the long term view ( 3-5 years average ).

The extended bullish divergence  comes in trending market, usually after strong bearish move, the pair consolidates for a while, as usual, the pair tries to bottom , but because of the lack of bullish momentum ,  sometimes extends its weakness beneath support level, to get the needed momentum before reversing strongly to the upside.(but in few cases, the pair continues to extend its weakens and it may dip 500/1000 pips even more before the next rise).

In our case, resistance is at 1.5794 (Jan 2012 high)  , the next main resistance is 1.6380 (Jan 2013 high), stability above this level on a monthly closing basis will have large bullish implication , and most likely will indicate that the consolidation pattern which started in Jan 2009 at 1.3500 levels, is likely over, further gains are likely towards 1.7000/1.8000 levels, almost the middle of 2007/2013 range…

On the downside, support is at 1.4830, stability above this level will keep the risk strongly to the upside towards 1.6000 levels and beyond, but losing 1.4830 on a monthly closing basis would mean that there’s no enough bullish momentum to take the pair to the upside, and the pair would extend its weakness towards 1.4200 ahead of 1.3500 levels to get the needed momentum before the next possible rise.

In all the pair is likely to consolidate within 1.4800/1.5800 range before the next move…